Benzinga: Music ETF (MUSQ) Hits the Right Note with Compelling Content Mix
Below is an excerpt from an article written by Josh Enomoto and appeared in Benzinga on 8/7/24:
Music entertainment company Warner Music Group (WMG) made headlines earlier today with the release of its fiscal third-quarter earnings report. Ahead of the disclosure, analysts anticipated earnings per share of 27 cents on sales of $1.56 billion. Actual results fell just shy of overall estimates, with EPS landing at 27 cents on revenue of $1.55 billion.
In the year-ago quarter, Warner Music posted 27 cents with a top line of $1.56 billion. These stats beat out expectations calling for earnings of 20 cents on revenue of $1.47 billion.
Interestingly, revenue for Warner's recorded music segment slipped by 2.4% on a year-over-year basis to $1.25 billion in Q3. However, music publishing sales jumped 7.8% against the year-ago quarter to $305 million. Further, digital revenue saw a boost of 5% YoY to $1.08 billion. Both units benefited from a boost in streaming volume.
Also, adjusted OIBDA (operating income before depreciation and amortization) increased by 6.4% to hit $316 million, with the margin improving by 130 basis points to 20.3%. Warner Music CEO Robert Kyncl pointed to the company's content advantage and "health industry trends" as contributors to its strong subscription streaming growth.
Looking ahead, analysts believe that by the end of the year, EPS could rise to $1.33, up almost 27% from last year's print of $1.05. On the top line, sales could hit $6.44 billion, up 6.7% from last year's tally of $6.04 billion. Further, fiscal 2025 could see yet more business expansion, with EPS jumping to $1.49 on sales of $6.75 billion.
Fundamentally, what's perhaps most encouraging about the content side of the music entertainment industry is the coming global paradigm shift. According to MIDiA Research, music industry revenue may hit $100 billion by 2031 in retail terms. Driving sentiment in the space is the continued expansion of music platform subscribers, which may break above the one billion mark in 2027.
Catapulting this growth could be the music industry's expansion in the Global South. MIDiA estimates that China will become the second-largest recorded music market by 2031.
The MUSQ ETF: To fully take advantage of this burgeoning opportunity in a convenient format, investors may consider the MUSQ Global Music Industry ETF An exchange-traded fund capturing the breadth of the global music industry, ownership of MUSQ provides investors exposure to WMG stock, which currently represents 2.43% of the fund's holdings.
However, the ETF doesn't stop there, with the fund featuring Warner's rival Universal Music Group. It also features Tencent Music Entertainment Group, which is projected for significant growth thanks to China's blossoming audio content ecosystem. As well, MUSQ investors enjoy exposure to small-capitalization plays like Reservoir Media, an independent music company.
For a complete list of MUSQ holdings, please click here.
Holdings subject to change.
Benzinga was compensated by MUSQ for writing and publicizing this content.
The above third-party article represents an assessment of the market environment at a specific time and is not intended to be a forecast of future events or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice regarding the fund or any security in particular. MUSQ claims no responsibility for its accuracy or the reliability of the data provided. Any opinions expressed in this article reflect analysis at the date of publishing and are subject to change.
MUSQ Global Music Industry Index ETF is offered by prospectus. Carefully consider the investment objectives, risks, charges, and expenses. This and other important information can be found in the MUSQ ETF prospectus, which should be read carefully before investing and can be obtained by visiting https://musqetf.com or by calling 1-855- MUSQ-ETF(687-7383).
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